City negotiating to buy DFA milk-plant property

ORIGINALLY WRITTEN DON RATZLAFF
If a few details can be ironed out, the City of Hillsboro will accept an offer from Dairy Farmers of America Inc., to purchase the company’s former milk-processing-plant property on the city’s north edge.

The Hillsboro City Council agreed to the tentative sale at a special meeting Thursday.

Mayor Delores Dalke said after the meeting that the sale became a desirable proposition for the city because DFA made a sale offer that was “much lower than what has been offered to the public.”

DFA’s requested price was not released for publication because the sale is still being negotiated.

The transaction would involve about 30 acres, which includes the land annexed by the city after DFA announced in August 1998 that it was closing the plant, as well as a sewage lagoon one mile north of the city.

The various buildings on the site total about 100,000 square feet, Dalke said.

“They felt that if the city could use (the property) for the public good, it would be a good way of paying Hillsboro back for the support they had received over the years,” Dalke said.

The company’s offer also reflected another reality: the company has been unable to sell the property to anyone else.

“I have been trying, as a real estate broker, to sell it for DFA ever since they left-however, there has not been a sale,” said Dalke, who is owner of The Real Estate Center in Hillsboro. “There have been many lookers, but there has been no sale.”

Dalke said she will receive no personal financial benefit from the city’s purchase, if it occurs.

“My position at this point is that I am only acting as the mayor,” she said. “I am negotiating from the city’s standpoint to help the city get (the property).”

The mayor said the only obstacles to closing the deal have to do with environmental concerns and liability issues regarding a natural gas line that was installed at the plant when it was owned by Associated Milk Producers Inc.

“We need to resolve the issues with the Kansas Department of Health and Environment regarding the existing sewer system and the asbestos that’s in the building,” Dalke said of the city’s environmental concerns.

If the liability issues regarding the natural gas line can be clarified, Dalke said, the line would have positive implications for major natural-gas users in Hillsboro.

“If you are large enough, you can do what they call ‘wheel’ gas-you can go out in the market, like in July and August, or whenever gas prices are cheaper, and you can purchase however much gas you think you are going to need through the next year,” Dalke said.

In addition to the advantage of negotiating a price with competing gas companies, owning the gas line reduces the transportation cost of delivering the gas.

“Because we would own the pipeline, we would be in a position to offer a price for the transportation of the gas (at a reduced rate),” Dalke said.

The mayor said the city has no definite plans for the property at this time.

“The council hasn’t dreamed about owning that building like I have,” Dalke said with a chuckle. “We will have to work out what future uses could be. There is open land that could be used for several purposes. Some of it, perhaps, could be sold for development.”

If the purchase is finalized, Dalke said the next step would be to create a committee to explore the possibilities for using the property.

“I get so excited when I think about what could be done,” Dalke said. “I envision it being the calling card when you come into Hillsboro (from U.S. Highway 56).”

Dalke said the city has not ruled out the possibility of reselling the property to a company wishing to locate in Hillsboro.

“If we were fortunate enough to find a company that could use the property, we would be more than happy to work with somebody who wanted to come in to those buildings and use those facilities,” she said.

“We will not do anything in the immediate future that would change the character of the property, so it would be available,” she added. “However, if that doesn’t happen, that’s when we will try to be creative with future uses for it.”

Portions of the facility are already being rented to other businesses. Precision-Gro, a new company that produces fertilizer packets for landscaping, has its production plant there. Barkman Honey and Hillsboro Industries both rent storage space, and Gorges Trucking uses the shop area for vehicle maintenance.

Those arrangements will continue undisturbed if the sale is completed, Dalke said.

“The offer of purchase that we have made has asked (DFA) to transfer all leases to the City of Hillsboro,” Dalke said.

Continuing those leases for the foreseeable future would be to the city’s financial advantage, she added.

“The revenue will more than pay the fixed expenses,” she said. “While we’re waiting to determine what the future will be of the building, they would not be a drain on the taxpayers.”

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